100% EOU - duty demand on capital goods - validity of order passed by settlement commission - permitted depreciation upto 90% on straight line method - Held that: - this Court is of the view that the Settlement Commission has given cogent reasons as to why the case has to be settled on the terms contained in the impugned order. This Court, exercising jurisdiction under Article 226 of The Constitution of India, will not examine the correctness of the impugned order as if acting as an Appellate Au .....

ayment of penalty to the extent of ₹ 50,000/- alone and immunity from prosecution under the Act and state that they are entitled to challenge only the portion of the order with regard to the duty demanded on raw material. This piecemeal challenge to the order of the Settlement Commission on the grounds raised by the petitioner is not tenable.
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With regard to the power of the Settlement Commission to be exercised under Section 127F(1) of the Act, the Settlement Commission has gone thro .....

ated:- 2-11-2016 - T. S. Sivagnanam, J. For the Petitioner : Mr. K. Jayachandran For the Respondents : Mr. A. P. Srinivas, SPC ORDER Mr.A.P.Srinivas, learned Senior Panel Counsel accepts notice for the respondents. Heard both. 2. The petitioner was earlier known as M/s.Chemcrown India Limited and it was a 100% export oriented unit located at Puducherry. In this writ petition, the petitioner challenges an order passed by the Customs, Central Excise and Service Tax Settlement Commission, Additiona .....

Settlement Commission on 31.8.2005 and by then, their name stood changed as M/s.Standard Shoe Sole & Mould (India) Limited. In the work sheet appended to the application in Annexure XII with regard to the duty demanded on raw material, the petitioner did not admit any duty liability. But, with regard to levy pertaining to duty liability on capital goods, the petitioner admitted a sum of ₹ 25,29,277/-, after which, the petitioner filed a written submission on 2.3.2006, enclosing a revis .....

5.6.1992, 21.4.1998 and 26.6.1998 and submitted that these circulars permit depreciation upto 90% on straight line method. Thus, this was the justification for the petitioner to file a revised work sheet, only with regard to duty demanded on capital goods. 5. The record of proceedings shows that by order dated 22.9.2006, there was an interim direction granted by the first respondent calling upon the petitioner to pay a sum of ₹ 10,17,283/- within a time frame, which the petitioner was unab .....

ettling the petitioner's case by arriving at the customs duty payable at ₹ 46,52,571/- and after giving credit to ₹ 10,27,099/- for the capital goods on the depreciated value, the petitioner was directed to remit the remaining amount with regard to the raw material. That apart, immunity from payment of interest under Section 127H of the Act was granted and an amount of ₹ 50,000/- alone was imposed as penalty. The petitioner was also granted immunity from prosecution under t .....

tioner could not have been made liable to pay duty on the raw material, on which, they have not admitted any duty liability before the Commission. 8. It is the further case of the petitioner that they are entitled for abatement of duty in terms of Section 22 of the Act, since the goods are damaged, deteriorated and unfit for use in the production activity. In terms of Section 127F(1) of the Act, in addition to the powers conferred on the Settlement Commission, it shall have all the powers vested .....

From the record of the proceedings, it is seen that at no point of time, the Department conceded that there is no liability towards duty on raw material. In fact, it is the petitioner, which did not admit any liability. But, the show cause notice, which led to the filing of the application before the Settlement Commission, had quantified duty on raw material. Therefore, it has to be seen as to how the Settlement Commission dealt with the matter. 11. The Settlement Commission took note of the sub .....

ortage of imported raw materials in the bonded warehouse and that the petitioner accepted the shortage and paid ₹ 8,21,955/-. 12. It was the further contended that the petitioner's sister concern situated in the adjacent premises was manufacturing identical goods, that the capital goods and raw materials removed were kept in the same area and that the chances of diversion of raw materials to DTA cannot be ruled out. It was also contended that though the petitioner knew that raw materia .....

w cause notice, admitting a duty liability of ₹ 25,29,277/- on the capital goods. In doing so, the applicant claimed 70% depreciation on the value of capital goods. The applicant did not admit any liability on the raw materials on the ground that they were not fit for consumption and merit to be destroyed and the duty remitted. The case was first heard by the Commission on 9.11.2005 and certain directions were issued to the Department on the applicant's claim. Some correspondence took .....

form the Department about the stoppage of production at any point of time, apart from the fact that the petitioner admitted the shortage of the goods, when the officials of the Department inspected their bonded warehouse. Thus, the Settlement Commission rendered a finding that it is not a case of destruction and for remission of duty as provided under the Act. 15. After considering the submissions on either side and perusing the findings recorded by the Settlement Commission, this Court is of th .....

tioner had been afforded full and effective opportunity. As the reasons given by the Settlement Commission are cogent and proper and the petitioner cannot be permitted to accept a portion of the order i.e. with regard to settlement in respect of the claim for duty on capital goods, immunity from payment of interest, restricting payment of penalty to the extent of ₹ 50,000/- alone and immunity from prosecution under the Act and state that they are entitled to challenge only the portion of t .....